Expecations for Franchisees - Franchise Secrets

Expecations for Franchisees

By October 31, 2019 Business, Franchising

You’ve taken the plunge; you’ve signed your franchise agreement. Whether it is your first franchise or your fifth, many exciting opportunities await. There will be challenges ahead as well. Erik Van Horn and Brian Holmes are here to help you navigate those challenges. Together they have over 25 years of experience with 13 different brands. They are excited to share their knowledge, insights, and stories with you so that your business can grow, and your franchise lifestyle can be successful and fulfilling.

Listen to Brian and Erik talk about franchisee expectations on episode 54 of The Franchise Story Podcast.

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You need to know your brand from the beginning. What is the variety and quality of the brand that you have decided on?  What sold you on this brand? What resonates personally? Are you wanting to be a semi-absentee owner, or do you expect to be rolling up your sleeves to help build the business? Did you buy because the brand itself is extremely well established, even if the salesperson made a mediocre pitch? Take the time to visualize your end goals. Stay connected to why you purchased this brand so you can maintain your vision throughout the process ahead. That perspective will be necessary to motivate those on your team over the long haul.

Understand at the front end that your manager or team are very significant to achieving any goals which you’ve set. You can’t simply hand off the business to a manager who is making $50,000 a year and achieve your goals. Even if your vision is semi-absentee ownership you will have a period of at least 90-120 days where you are building the foundations for operational success. Building those foundations also involves finding the right people for your team. You are really looking for someone who sees the same value in the brand that inspires you. You also want to look for people who already have a history of success.

Erik says, “Winners win, and winners attract winners. I remember early on, our friend John Hewitt, he would have people wanting to buy a franchise and they needed financing help and John would extend financing to certain people. And I remember being in different meetings and he said, ‘Erik, if their own family will not invest into them, why would we invest?’ If those that are closest to you that know you are not willing to bet on you even a little bit, then why should I?” Try to find people with a track record of success. It doesn’t necessarily have to be success in the type of brand or business you own. Any one can learn the nuts of bolts of the brand. Instead you are looking for someone with the tenacity to do what it takes to cross the finish line.  

Who you decide to hire can be one of the steepest learning curves in building your business. Be patient with the process because HR decisions are some of the most complex and challenging decisions you will have to make. Mistakes happen. Expect a certain degree of course correction. Keep in mind you are learning and building experiences which will make your business stronger even if there are short term challenges. Brian says, “A business is like an ongoing concern… it never gets to perfect and stays perfect. It’s always going to be up and down, and you will always be building relationships with your team, with your employees.”

After you hire your team or manager you need to establish your benchmarks for success. As the owner, you alone will need to hold that team accountable for operational success and excellence. Again, there can be a serious learning curve here if you are someone who is reluctant to clearly communicate your expectations. Erik says, “It’s hard because the lot of people just aren’t confrontational. Also, I think a lot of new business owners, they get handcuffed…because a person may know a few things about the business operations that the owner doesn’t…and it keeps that owner handcuffed.” That manager may also withhold information to keep their role as an underperforming manager and that’s when a downward spiral begins. 

To avoid these pitfalls, you need to have a true foundation of trust with the people on your team. They need to trust they can come to you and that you will support and help them. You can’t be subtle or passive. You need to be clear about your expectations but willing to hear their concerns. Ask yourself, “What is that person’s role day to day?” And from there you can put tools in place to measure and assess performance. You may need to have something formal like quarterly performance reviews. It could also be less formal and simply be a regular dialogue assessing the key performance indicators (KPI) you have decided upon.

Also remember that if you have a brand that is a proven concept it will probably be much easier to have some of these conversations. With an emerging brand, however, you will need more creativity, flexibility and patience to discover the KPIs which are most suited to that brand. As a starting point for finding those KPIs Brian recommends the book, The Four Disciplines by McChesney, Covey, and Huling.

Remember that your focus will be primarily holding people accountable to the predetermined process that you have decided on – not necessarily the outcome. You will certainly monitor outcomes, but the process is the most important factor related to the accountability of your team. Outcomes will include things like your revenue and units sold which are some of your lag indicators; but your lead indicators will be the things that need to happen before you get the sale. Those lead indicators will be the main elements which require a process for accountability.

Those indicators will be unique to each type of business. For example, it could be as simple as the number of phone calls made or appointments booked. In other businesses you could be monitoring average tickets or customer counts. As the owner you should be setting those lead indicator targets, communicating them clearly and assessing your team’s performance based on those goals. Brian says,
“If you don’t know, then your team doesn’t know, right? They don’t know how to do it if you don’t know how to do it. So even if they’ve had an experience in your industry, they may not be the person that can really drive the results. So that’s what I mean by monitoring your process. You need to step back and figure out what activity drives that number of appointments booked (or whatever your lead indicators are) and monitor the process.”

Be aware that emerging brands may not have a clear-cut sales process. They might not have the tools in place for your team to find clients and create revenue. A good standard to keep in mind: If there aren’t at least 100+ units open you are dealing with an emerging brand. You will be looking at yourself or your team having a much larger time sink in creating some of the sales processes and plans. For some franchisees that type of challenge and flexibility is really appealing. It may even be one of the reasons someone chooses an emerging brand over another more established business. Erik says, “If it’s 20 or 40 [units] and the business is fairly young, you’re going to begin to figure it out. You don’t need to think that this is a negative thing. This is just part of the entrepreneurial journey. Because if you want to buy a business, you need to think like an entrepreneur. You need to have that mindset. And that means that everything is not going to be predetermined for you and you’re going to have to get in there and you’re going to have to do a little problem solving.”

Erik says, “If I had one piece of advice for anybody that is getting into an emerging brand (and they have high expectations) it is to talk to as many franchisees as you can. Even though in emerging brands, there are not many out there. I’ve talked to a lot of them and see if what you’re wanting to do it aligns with what they’ve done. If you don’t have the franchisees to talk to or if it doesn’t align and this is a new program for the franchisor terms of a semi absentee deal, you have to be okay of getting in there and working hard and having the expectation that it’s not going to be semi absentee from the beginning.”

A final point to remember is that maintaining trust between yourself and your franchisor is going to give you the best results in your business. Brian says, “Your relationship with your franchisor is a long-term marriage. The teams that work in the concepts at the corporate side, treat them with respect and understand how hard they are working. You really need to look at it from their perspective. Sometimes franchisees can be very difficult to work with and they can be very demanding and unappreciative of what it is that the franchisor or the corporate team is providing for them. You need to have conversations with people at corporate and appreciate them and stay plugged in.” Knowing where you fit into the scale of the franchisors’ business will really help with your perspective. There is a big difference between being the 20th or the 200th franchise. Knowing what your business goals are and aligning them with your franchisor’s goals will help you in the long run.

To close, Brian reminds us that at the end of the day, business ownership and responsibility falls on the shoulders of the owner. There are always outside factors positive and negative which will be influencing our business; but our autonomy and insight as the owner is ultimately the engine that drives the business forward. Brian says, “If there is any successful franchisee in your system, then you can also be successful. If you’re not getting the results that you want, look at yourself first and the way that you’re executing and start from there.”